Bank of England majority against rate rise

Out of the nine members of the Bank of England’s MPC (Monetary Policy Committee), only two voted against keeping interest rates at a record low of 0.5% at October’s meeting, which was the same proportion as in September and August. Some analysts had been expecting the split to widen, while others thought the opposite might occur.

Mr. Haldane, who Time magazine listed as one of the 100 most influential people worldwide, had been keen on an interest rate hike just a few months ago. He said last week that recent evidence had changed his forecasts for the UK economy, and also the world.

He is now less optimistic regarding demand in the UK and believes inflationary forces will weaken further in the near term.

The UK economy is growing strongly, there is an excellent balance between consumption and investment, employment is high, and borrowing costs are low, he said. However, real wages have only risen in 3 of the past 74 months, productivity has not improved since 2008, and real interest rates are just about at zero, he added.

This combination is “virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the world wars and the early 1970s,” Mr. Haldane said.

The British economy appears to be “writhing in both agony and ecstasy. It is twin peaked,” he said. The big worry is which one will prevail.